Cao Yin: Deconstruction and reconstruction of the world by blockchain network dynamics

Marx once said: "Steam, electricity and automatic looms are even more dangerous revolutionaries than citizens Barbès, Raspail and Blanqui." Barbès, Raspail and Blanqui were all famous French revolutionaries in the 19th century. Marx's meaning is very clear. The revolution of productive forces is the basis of all revolutions in production relations.

Since the steam-powered industrial revolution, the development of human social productivity has entered a new era, from linear development to exponential development. Especially since the computer age, major technological breakthroughs have emerged one after another. The speed of technological progress has far exceeded the speed of human thinking about the changes in social production relations brought about by technological revolution. As a result, it is difficult for us to give an accurate and forward-looking strategic evaluation of the social significance of the ever-changing technological progress. Making such an evaluation requires the evaluator to have a deep understanding of both technology itself and production relations, which is not easy. However, if the significance of technological progress itself cannot be summarized, abstracted and sublimated, the development of technology will inevitably encounter serious bottlenecks. Any productivity revolution must have a corresponding sociological and economic theoretical foundation to provide ideological guidance. This is like, before the birth of Marx's scientific socialist theory, the European working class made many attempts to establish a socialist regime, but all failed. The most famous attempt was the Paris Commune movement. The reason for this was the lack of mature theoretical guidance.

At present, although the development of blockchain has just entered the right track and has begun to receive attention from mainstream society, the unprecedented decentralization and trustlessness of blockchain technology has brought great shock to the industry, and the concept of blockchain industry revolution has already emerged. However, looking at the current blockchain teams around the world, whether they are entrepreneurial teams or internal teams, not many companies can design the development strategy of blockchain companies from the perspective of productivity revolution. In addition to limited capabilities, the main reason is that there is currently no mature theory that can explain the revolutionary significance of blockchain technology from the perspective of reconstructing production relations.

As an important enabling technology, the application scenario of blockchain lies in the Internet. Therefore, the sociological significance of blockchain technology can be systematically explained from the perspective of network dynamics. As the largest complex system in human history, the study of the internal laws of the Internet is an emerging interdisciplinary subject in recent years. Network dynamics studies the dynamic influence of several groups of basic forces on human organizational forms and production relations based on time integration in this super-complex system with information as the transmission medium, and explains and predicts various complex social phenomena with abstract mathematical models and universal mathematical language.

Jonathan Turner, a world-renowned American theoretical sociologist, pointed out in his classic book "Social Macrodynamics" that there are several basic forces that determine the organizational form of human society, and various social phenomena are the result of the interaction of these basic forces. These basic forces include:

(1) Population size and growth rate;

(2) Production level;

(3) the total amount and rate of distribution of the means of production and the results of production;

(4) The degree of centralization of power.

In addition to population size and growth rate, blockchain affects one of the four basic social forces and completely changes the other two. Through its mandatory trust and peer-to-peer interaction functions, blockchain has completely changed the way power is concentrated and operated, and has also changed the way production materials and production results are distributed. And by subverting the two, it has greatly improved the level of productivity. Blockchain technology has the ability to significantly change the world and can be compared with technological revolutions such as electricity and the Internet.

Understanding the revolutionary significance of blockchain technology from the perspective of network dynamics, we can interpret the process of blockchain technology subverting production relations as a process of "deconstruction" and "construction".

Deconstructing the sociological application of the first principles of physics

Most people have heard of the "first principles of physics" because Elon Musk creatively used it as a way of thinking in the business strategy of electric vehicles and energy storage. Although Musk's understanding of the "first principles of physics" is not appropriate, the merits outweigh the flaws. As a solution tool for quantum mechanics, the "first principles of physics" do have extraordinary significance in our economic life.

The "first principles of physics" originally refers to an algorithm that directly solves various microscopic physical phenomena based on the basic laws of motion of the interaction between protons in the nucleus and peripheral electrons, using the principles of quantum mechanics, and starting from specific requirements. The reason why it is called "first principles" is mainly because when performing first principles of physics calculations, in addition to using the mass of electrons, the mass of protons, and the ultimate constant that remains unchanged: the speed of light, no other empirical parameters are used. Through the "first principles of physics" algorithm, we can not only deconstruct all microscopic physical phenomena, but also, as long as there is enough computing power, we can deconstruct and explain all macroscopic physical phenomena, such as earthquakes, explosions, lightning, and even the destruction and birth of stars.

Blockchain technology is the best tool for applying the "first principle of physics" to the deconstruction of production relations. At present, the various organizational relationships that we humans use in production and life are very complex, from partnerships to corporate enterprises to various industry alliances, from political parties to countries to various international organizations. At the same time, in order to make resources circulate between the subjects of production relations and maintain the order of the relationships between the subjects, humans have also designed various business models, systems and laws, and created a large number of third-party institutions to maintain the operation of models, systems and laws, such as law firms, accounting firms, courts, exchanges, banks, securities companies, insurance companies, etc. This centralized resource scheduling and power distribution system consumes a lot of production resources, but before the emergence of blockchain technology, this orderly organizational method and standardized social order were extremely necessary, because the current organizational form is the evolutionary result of continuous Pareto improvement that can ensure the effective transmission of trust under the current level of productivity.

However, in the blockchain era, the traditional form of social contract will be subverted. Blockchain realizes the deconstruction of production relations with the functions of direct point-to-point trust transmission and mandatory trust. Its deconstruction principle is very similar to the deconstruction of macroscopic physical phenomena by the "first principle of physics". Macroscopic physical phenomena of any scale, whether it is landslides or the movement of the sun and the moon, can be explained by the most basic relationship between protons and electrons. In the blockchain era, any economic behavior, whether it is stock issuance or bankruptcy liquidation, any organizational form, whether it is a startup partnership or a multinational enterprise, will be deconstructed by the blockchain and deconstructed into the most basic economic behavior between people.

Constructing cellular automata based on human cells

When the centralized production relations that we are accustomed to are deconstructed by blockchain technology with the "first principle of physics", how to reconstruct new production relations becomes crucial. In the blockchain era, production relations will be reconstructed with the "cellular automaton" model.

Cellular automata were proposed by John von Neumann, the "father of computers" as a model of parallel computing. They are defined as a dynamic system that evolves in the time dimension according to certain local rules in a cellular space composed of cells. Specifically, the components that make up a cellular automaton are called "cells". Each cell has a state, and this state belongs to one of a finite set of states, such as "life" or "death", "1" or "0", "black" or "white", etc. These cells are regularly arranged on a spatial grid called "cellular space". Their respective states change over time. Most importantly, this change is updated according to a local rule, that is, the state of a cell at the next moment is determined by its own state and the state of its neighboring cells. The cells in the cellular space perform synchronous state updates according to such local rules, and a large number of cells form the evolution of a dynamic system through simple interactions. The status of these cells is equal, and they evolve in parallel according to the rules without the need for central control. In this case without central control, they can effectively "self-organize", and thus a variety of complex and bizarre behaviors emerge as a whole. This tells us that centralized control is not the only means to manipulate the system to achieve a certain goal.

Cellular automata are a very magical dynamic model. They are simple and complex, with simple rules and clear subjects, but they can evolve into very complex dynamic systems. This dynamic model, which interacts with each other through point-to-point relationships between cells and follows certain rules, is very similar to the network dynamic model of interaction between people on the blockchain. The four basic elements of cellular automata can find one-to-one mapping objects in blockchain network dynamics: subject cells-economic activity subjects (people), cellular spaces with clear boundaries-economic ecosystems with clear boundaries (industry ecosystems or enterprise ecosystems), neighbor cells-objects that have relationships with subjects (other people), and rules-business rules. The evolution process of these four blockchain network dynamics elements in the time dimension is very consistent with the evolution model of cellular automata. In an economic ecosystem with clear boundaries, the state of each subject at the next moment is determined by the state of the subject and the object with which it has an economic relationship, and all subjects perform synchronous state updates based on limited and certain business rules. A large number of economic subjects constitute economic communities, and through simple interactions, they constitute the common evolution of dynamic systems.

This evolution is neutral, that is, the economic ecosystem may die with evolution, or it may stagnate, or it may evolve into a new ecosystem with higher efficiency, larger scale, and more frequent interactions. According to the current research on cellular automata models, cellular automata can be divided into four categories:

1. Stagnation type: Starting from the initial state, after a certain period of operation, each cell is in a fixed state and does not change with time.

2. After the periodic type has run for a certain period of time, the cellular space tends to a series of periodic structures, which repeats itself over and over again.

3. Chaotic type: Starting from the initial state, after running for a certain period of time, the cellular automaton exhibits chaotic non-periodic behavior and has no definite change pattern.

4. The complex type is between complete order and complete chaos. Complex structures, or local chaos, will appear locally. Some of them will continue to spread, forming the evolution of "emergent computing".

▲The fourth cellular automaton model “Breeder”

This is the evolutionary model of production relations under the blockchain network dynamics. The most competitive will be the fourth type of complex cellular automaton model. Since the evolution of cellular automata is only affected by the rules of cellular automata, the competition between different cellular spaces is actually the competition between the rules of different cellular automata. The element of competition lies in how to design the interaction rules between different subjects. Under the blockchain network dynamics model based on the cellular automaton model, all corporate organizations will exist in the form of DAO (Distributed Autonomous Organization).

To make it easier to understand the reconstruction and evolution of production relations based on cellular automata, let's take an example. P2P credit is an important form of Internet finance, but currently P2P credit is still a platform-centric model, not a direct peer-to-peer lending. After applying blockchain technology, the P2P industry is reconstructed with a cellular automaton model. Lending activities between people occur directly, and the interactive relationship between people is automatically executed according to the blockchain-based protocol. All subjects can be both borrowers and lenders at the same time. The relationship between a large number of lending subjects causes the evolution of the entire P2P credit ecosystem. Its evolution or degradation mode can be horizontal, that is, the increase or decrease in the number of credit subjects, the increase or decrease in the frequency and amount of credit between subjects; it can also be vertical, that is, the entire P2P credit ecosystem evolves to a more advanced or lower business model. The key to the evolution or degradation of the ecosystem lies in the design and implementation of rules.

The biggest difference between the construction of production relations based on the cellular automaton model and the traditional production relations organization lies in whether there is a power and trust center with resource allocation as its function to dominate the evolution of the economic ecosystem. Under the cellular automaton model, a spontaneous order will still be constructed at the overall level. Moreover, once this emerging spontaneous order becomes complex to a certain extent, it will form a completely new virtual level. The emergence of this virtual level will trigger another round of evolution in the virtual level.

We always habitually equate complexity with disorder. In fact, disorder is not complexity, and order is not simple either. Complexity exists on the edge of complete disorder. Moreover, the basic mechanism for the generation of complexity is precisely simple repetition. The complex phenomena of complex systems are the result of simple interactions and repetitions between subjects. Complex systems exist in the unity of opposites of simplicity and complexity. In the blockchain era, the production relations we are accustomed to will be completely deconstructed by the "first principle of physics". The deconstructed individuals will be reconstructed in the form of "cellular automata" and the production relations will be completely evolved. A completely unfamiliar but exciting new economic ecology will emerge, and the relationship between people will be redefined accordingly. Blockchain network dynamics is the theoretical basis of this new economic ecology. All changes and innovations based on blockchain can be explained and predicted through blockchain network dynamics.